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From Health Law Daily, July 29, 2015

Dual eligibles have standing to appeal Medicare claims denial

By Mary Damitio, J.D.

Claimants who were “dual eligible” for Medicare and Medicaid had standing to bring suit to appeal the denial of their home health service Medicare benefits, despite the fact that they also had coverage under Medicaid, a district court ruled in denying the HHS Secretary’s motion to dismiss. The claimants were seeking to enforce their statutory rights to receive Medicare benefits and the fact that they may not be financially liable for the costs of services did not defeat their standing to bring suit (Ryan v. Burwell, July 27, 2015, Crawford, G.).

Background. Marcella Ryan and John Herbert, both “dual eligible” for Medicare and Medicaid, receive home health care services. Ryan, who is legally blind, suffers from cerebral palsy, muscular dystrophy, and other ailments and has received home health services since 1998. Ryan is limited to a wheelchair or a bed and is hospitalized frequently. Ryan received at least seven initial denials of eligibility for Medicare home health benefits. After each denial, she appealed to an administrative law judge (ALJ), who determined her to be eligible for home health services because she could not leave her home and required skilled nursing services. However, for the period April 2009 through July 2010, her claims for home health care services were denied because she was found not to be confined to her home. The claims denials were upheld by a Qualified Independent Contractor (QIC), an ALJ, and the Medicare Appeals Council.

Herbert is a wheelchair-bound quadriplegic who suffers from multiple medical problems. He has received home health benefits since 1997. Like Ryan, he was initially denied his benefits, but was successful in his appeals. However, he was unsuccessful in appealing the denial of his home health benefits for the period August 2010 through June 2011. Both claimants brought suit alleging that the HHS Secretary failed to follow federal regulations governing Medicare coverage appeals when their home health service claims were denied.

Policies. Medicare provides coverage for home health services if certain qualifications are met and the beneficiary is found to be confined to the home (42 U.S.C. § 1395f(a)(2)(C); 42 C.F.R. Sec. 409.42).The Medicare Program Integrity Manual (MPIM) requires Medicare Administrative Contractors (MACs) to pay all claims after there has been an appellate decision that a beneficiary is confined to the home. Additionally, the reviewers are instructed to establish procedures so that favorable decisions will be given “great weight,” in determining whether a beneficiary is confined to the home. Although not binding, QICs must give “substantial deference” to its policies (42 C.F.R. Sec. 405.968(b)(2)). Likewise, ALJs and the Appeals Council must give deference to the policies, and must explain any departure from those policies (42 C.F.R. § 405.1062(a),(b)).

Standing. The claimants had constitutional standing to bring their suit because they were seeking to protect their right to Medicare coverage. For standing purposes, it is sufficient that the claimants were seeking to enforce a statutory right even if they would not suffer a monetary loss. The vast majority of courts have found dual eligible claimants to have standing to sue to enforce their entitlements to benefits, even if the bill is covered by Medicaid.

Notice of non-coverage. The claimants also had standing because their home health service claims have been denied, which put them on notice that Medicare will not likely cover such services in the future. Under the regulations, once a Medicare beneficiary is on notice that services may not be covered, he or she may be held financially responsible for the costs (42 U.S.C. § 1395pp).

Estate consequences. Ryan was able to establish that she had standing because due to her age, there is a possibility that Medicaid will seek to recover benefits from her estate (42 U.S.C. § 1396p). In Vermont, a Medicaid recipient’s estate is subject to recovery of benefits if it is larger than $2,000 at the time of death.

Other consequences. Medicare and Medicaid benefits, although similar, are not identical, with the benefits provided by Medicare being more favorable to the beneficiaries.

Cognizable claim. The allegations were also sufficient to state a claim based upon the “Accardi Doctrine,” which is the principle that regulations created by a federal agency are controlling upon that agency. The manuals at issue contained language that mandated that the MACs were required to afford a finding of home confinement great weight in evaluating subsequent claims. The regulations also provide that QICs, ALJs and the Appeals Council will give substantial deference to those policies (42 C.F.R. Sec. 405.1062). If it fails to do so, the Appeals Council must explain why the policy was not followed (42 C.F.R. § 405.1062). Therefore, the factors supported the conclusion that the rule was intended to be binding on the MACs and the QICs, ALJs, and the Appeals Council, and thus the claimants had stated a sufficient claim for relief. The court further found that the board injunctive relief sought by the claimants was not improper, and the motion to dismiss was denied.

The case is No. 5:14-cv-00269.

Attorneys: Alice Bers, Esq. (Center for Medicare Advocacy, Inc.) for Marcella Ryan and John Herbert. Daniel Bensing, U.S. Department of Justice, and Owen C.J. Foster, U.S. Attorney's Office, for Sylvia Mathews Burwell.

Companies: U.S. Department of Health and Human Services

MainStory: TopStory ClaimsAppealsNews CMSNews PartANews PartBNews MedicaidNews PaymentNews HomeNews VermontNews

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